Kiwibank has made a $52 million profit for the December half year, down from the previous record half-year profit of $58m.

The bank says it is also trying to sell more products to its existing 840,000 customers, as it spreads into small business banking, insurance and wealth management.

Kiwibank chief executive Paul Brock said the half-year profit was was "satisfactory" but fell short of the excellent result last year, because of strong bad debt recovery numbers in that period. The latest result was also affected by tighter lending margins, greater competition and investment in the bank's customer information systems as part of new anti-money laundering rules. The net interest margin was 1.82 per cent in the latest half year, compared with 1.83 per cent in the same period a year before.

In the six months, Kiwibank lending was up almost 6 per cent, which Brock called "good strong growth". The lending market was competitive, in an environment of lower interest rates.

"There has been a significant, continued flight to fixed rate lending, as people perceive rates to move up in future as the economy improves," Brock said.

Kiwibank expects that the portion of borrowers on fixed term rates will soon return to past levels of about 70 per cent, up from about 60 per cent for the bank now, as borrowers looked for more certainty when interest rates were rising.

Nationally, Reserve Bank figures show the portion of loans on fixed terms has jumped from 46 per cent at the end of 2012, to almost 59 per cent in December.

The Reserve Bank is widely expected to start lifting official interest rates by the middle of next month, though some fixed term rates have already moved up since late last year.

Kiwibank also said yesterday it would make a "substantial" investment of more than $100m in the next four years, to upgrade its product and payment systems. That will help the bank expand into more small business banking, insurance and wealth management.

At the end of December Kiwibank had 840,000 customers, representing 23 per cent of all New Zealand bank customers.

Some 385,000 of those were considered main bank customers, with most or all of their banking with Kiwibank. That represented a market share of 10.7 per cent.

"Despite the fact that bankers like to think people join banks, people actually don't join banks. They leave [other] banks. All those who have opened one account with us are in the process of leaving their other bank and have been doing that for the past few years."

Kiwibank has 35,500 business banking customers, with 3 per cent net growth in the half year.

Kiwi Group Holdings, the parent company in turn owned by NZ Post, has investments in New Zealand Home Loans, Kiwi Insurance and Gareth Morgan Investments. As at the end of December, NZ Home Loans had signed up lending of about $600m. Group KiwiSaver, including GMI and Kiwibank KiwiSaver, had about $1.4 billion in investments and 105,000 members. GMI's funds under management grew to more than $2.3 billion.